{"id":24593,"date":"2017-11-15T18:15:45","date_gmt":"2017-11-15T23:15:45","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/major-league-baseball-a-leader-in-live-content-distribution\/"},"modified":"2017-11-15T18:24:52","modified_gmt":"2017-11-15T23:24:52","slug":"major-league-baseball-a-leader-in-live-content-distribution","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/major-league-baseball-a-leader-in-live-content-distribution\/","title":{"rendered":"Major League Baseball: A Leader in Live Content Distribution"},"content":{"rendered":"

This is a story of how Major League Baseball (\u201cthe MLB\u201d) out-innovated other professional sports leagues (NFL, NBA, NHL) and Silicon Valley (Facebook, Google, Amazon) in response to an increasingly digitalized supply chain for live entertainment content. If you\u2019ve watched NCAA March Madness games on your computer or Game of Thrones on your iPad, you\u2019re well-acquainted with the MLB\u2019s self-incubated streaming technology. More below.<\/p>\n

Later Innings for Cable<\/strong><\/p>\n

News, movies, and music are migrating to our mobile devices and computers \u2013 a trend that is both a concern and opportunity for sports and entertainment providers like the MLB.<\/p>\n

The concern<\/em> stems from that fact that most MLB content was governed by cable companies and consumed through TV. After a de facto monopoly on live content, cable is losing juice as the consumption of live sports undergoes \u201cdigital 2.0\u201d via online streaming. As depicted in Exhibit 1<\/strong> below, which illustrates the process of generating and delivering live content, it is a necessity for the MLB to restructure its supply chain to meet end-users (fans) where they\u2019re most engaged.<\/p>\n

The opportunity<\/em> for the MLB lies in the various shortcomings of cable. First, since cable is a bundled service, it comes at an unnecessarily high cost. Second, cable is tethered to a defined geographic area, leaving out-of-market fans struggling to keep up. Third, contractual disputes between networks and cable providers have led to temporary blackouts in major markets, including New York and Los Angeles. In all three instances, the supply of content becomes starved or completely shut off, which in a cable-dominated world was the price of doing business.<\/p>\n

BAM! A Grand Slam<\/strong><\/p>\n

In recent history and for the near-term, the MLB has stepped up to the plate in response to the challenges of evolving digitalization. In 2000, the MLB\u2019s team owners founded a start-up: MLB Advanced Media (\u201cBAM\u201d), a separate entity within MLB that would go on to develop the preeminent over-the-top (\u201cOTT\u201d) \/ direct to consumer live streaming application [1]<\/sup>. BAM\u2019s pinnacle product \u2013 MLB.TV \u2013 allows fans to watch any out of market game on their computer, smartphone or tablet for ~$100 per season [2]<\/sup>. The games are streamed in HD quality where fans view the same production that is broadcasted on cable TV (Exhibit 2<\/strong>). By mitigating cable\u2019s reign over the supply of content, the MLB now disseminates its product to a wider breath of end-users.<\/p>\n

The MLB\u2019s decision to solve its supply chain problem in-house will continue to pay dividends in the medium and long-term. As it turns out, BAM\u2019s streaming tech is world class<\/em> and other sports, media and entertainment platforms want a piece of the action. The World Cup, NHL, PGA, NCAA March Madness, WWE and PPV boxing are all paying clients of BAM [1]<\/sup>. In 2015, HBO called on BAM to run its \u201cHBO Now\u201d platform after their first, in-house attempt at streaming (\u201cHBO GO\u201d) led to outages during Game of Thrones<\/em> and True Detective <\/em>[3]<\/sup>. iPhone, Roku, Apple TV, Playstation 3 and other streaming-focused hardware now beta test with BAM to make sure their designs are explicitly compatible before broad market launch [3]<\/sup>. The entire supply chain of live content consumption revolves around BAM.<\/p>\n

In August 2017, Disney purchased a controlling stake in BAM (now called \u201cBAMTech\u201d) for ~$3.75 billion. The MLB\u2019s 30 teams still retain a 15% stake [4] [5]<\/sup>.<\/p>\n

What\u2019s on Deck<\/strong><\/p>\n

The significant monetary opportunity within live streaming has drawn the attention of Facebook, Google, Amazon, and Twitter. While MLB beat Silicon Valley to the party, these media giants have deep pockets, a large captive audience, and are prepping their arsenals to make a serious play at hosting streaming. To further ride the opportunistic wave of increased digitalization, the MLB should forge meaningful partnerships with these companies. In fact, they\u2019re getting a head start. In 2017, select regular season MLB games were streamed live on Twitter and Facebook and the 2017 World Series was available on YouTube TV [6]<\/sup>.<\/p>\n

Additionally, the MLB should think about future vehicles of content consumption. Virtual reality (VR), for example, was omitted from the right side of Exhibit 1 <\/strong>but will play a meaningful role going forward. The NBA has already streamed live games in VR through its partnership with NextVR [7]<\/sup>.<\/p>\n

Calling Balls and Strikes<\/strong><\/p>\n

A few open questions for discussion:<\/p>\n

    \n
  1. How will cable companies respond to their lost share of content?<\/li>\n
  2. Is the MLB shooting itself in the foot by selling its streaming platform to other (often competing) sources of entertainment?<\/li>\n
  3. Does online consumption cannibalize non-digital consumption? If I can watch the game in HD on my iPhone, will my average \u201cin-person\u201d game attendance decline?<\/li>\n<\/ol>\n

    Word Count: 770<\/p>\n

    —<\/p>\n

    Exhibit 1: Supply Chain of Digital Content<\/strong><\/p>\n

    \"\"<\/a><\/p>\n

    Source: Adapted from Cognizant 20-20 Insights, February 2016<\/p>\n

    Exhibit 2: MLB.TV Interface<\/strong><\/p>\n

    \"\"<\/a><\/p>\n

    Source: Major League Baseball<\/p>\n

    Sources<\/u><\/p>\n

    [1] Brown, Maury. \u201cThe Biggest Media Company You’ve Never Heard Of,\u201d Forbes, July 7, 2014, https:\/\/www.forbes.com\/sites\/maurybrown\/2014\/07\/07\/the-biggest-media-company-youve-never-heard-of\/#620cc6271cef<\/p>\n

    [2] Brown, Maury. \u201cFrom Lower Costs To Single-Teams, MLB.TV Ready To Stream 2016 Season,\u201d Forbes, February 15, 2016, https:\/\/www.forbes.com\/sites\/maurybrown\/2016\/02\/15\/from-lower-costs-to-single-teams-mlb-tv-ready-to-stream-2016-season\/#55f77cd72b0b<\/p>\n

    [3] Popper, Ben. \u201cThe Changeup: How baseball\u2019s tech team built the future of television,\u201d The Verge, August 2016, https:\/\/www.theverge.com\/2015\/8\/4\/9090897\/mlb-bam-live-streaming-internet-tv-nhl-hbo-now-espn<\/p>\n

    [4] Perez, Sarah. \u201cBAMTech valued at $3.75 billion following Disney deal,\u201d TechCrunch, August 8, 2017, https:\/\/techcrunch.com\/2017\/08\/08\/bamtech-valued-at-3-75-billion-following-disney-deal\/<\/p>\n

    [5] Brown, Maury. \u201cDisney Accelerates Purchase Of BAMTech And Announces Streaming Service With ESPN,\u201d Forbes, August 8, 2017, https:\/\/www.forbes.com\/sites\/maurybrown\/2017\/08\/08\/disney-accelerates-purchase-of-bamtech-espn-disney-will-see-new-digital-streaming-media-apps\/#6df9800e4a5d<\/p>\n

    [6] Brown, Maury. \u201cLive MLB Games Begin Streaming To Twitter On Tuesdays, Comes On Heels Of Facebook Deal,\u201d Forbes, May 25, 2017, https:\/\/www.forbes.com\/sites\/maurybrown\/2017\/05\/25\/live-mlb-games-begin-streaming-to-twitter-on-tuesdays-comes-on-heels-of-facebook-deal\/#3905d3805f0d<\/p>\n

    [7] Moynihan, Tim. \u201cGET READY TO WATCH LIVE NBA GAMES IN GLORIOUS VR,\u201d Wired, October 20, 2016, https:\/\/www.wired.com\/2016\/10\/get-ready-watch-live-nba-games-glorious-vr\/<\/p>\n","protected":false},"excerpt":{"rendered":"

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